Maruti to invest ₹45,000 cr to double capacity by FY31

While Maruti Suzuki is trailing some rivals in launching electric vehicle (EV) models, the largest car manufacturer’s strength lies in advanced technologies such as hybrids, vehicles fuelled by ethanol and compressed natural gas (CNG), chairman R.C. Bhargava said on Tuesday.

“We are behind some companies in launching EVs, but that does not mean that we are late in the market, or that when we are coming in FY25, we will have in any way damaged our ability to get an adequate market share,” Bhargava told shareholders during Maruti Suzuki’s 42nd annual general meeting.

Japan’s Suzuki Motor Co., the parent firm, plans to launch six battery electric vehicles in India by 2030, with the segment accounting for 15% of Maruti Suzuki’s India sales by the end of 2030.

Maruti Suzuki will also be investing ₹45,000 crore to double its production capacity from the existing 2.25 million units to 4 million units in the next seven years, with a new one million-unit facility in Haryana’s Kharkhoda besides another one million unit plant at a new, undecided location.

“The era ahead of us is going to be very uncertain and challenging. Putting up the 2 million cars will cost us close to ₹45,000 crore, depending on how inflation increases. At the moment, estimated costs are around ₹45,000 crore for the two million cars. We have to put in more investments in our marketing and sales which we have been doing over the last eight, or nine years. So, we increase our capacity to sell and service cars from the current two million to four million.”

“We have to develop infrastructure for dealing with the rising demand for our vehicles outside India. The export volume we expect to have by 2030-31 is around 800,000. And this is a different order than what we get today. A lot of infrastructure and support service will be needed to fulfil this demand, and all of it is going to require a lot of investment,” said Bhargava.

“Maruti Suzuki will not be behind, and we are not late. Our market share went down recently because of factors relating not only to shortage of chips, but also because we were essentially a small-car manufacturer. Now we have to adjust to the fact that because of regulatory and other factors, the market for small cars is coming down and market for SUVs is going up. We are adjusting to that. I am sure in coming years, we will make every effort to retain our old market share,” he added.

“I think the management, our engineers and Suzuki Japan have all carefully assessed the environment for EVs in India. The planned production between FY25 and FY31 will give us a very good position in the market. Simultaneously, we are working on all other (emissions-friendly) technologies. We already have two hybrid vehicles. Don’t think any other manufacturer has two hybrid vehicles in the market, or can even hope to have them. Our hybrid cars are doing very well. We are, by far, the leaders in CNG vehicles with a market share of CNG vehicles is 25% or 30% and nobody is close to us in that area.”

“Our vehicles have been modified to meet the 20 norms (fuel blended with 20% ethanol). The alliance with Toyota that Suzuki has in Japan gives us access to all kinds of emerging technologies,” he said.

The firm is also contemplating a share split, “A few shareholders have talked about the need to split the shares. We will take it up with the board. It will certainly increase people’s ability to trade in the shares because the price is ₹10,000 apiece. Otherwise, as far as the performance of the company is concerned, returns to the shareholder, a split in the shares, or bonus shares will not make any significant difference,” Bhargava signed off.